(Reuters) - Brent crude futures dropped more than $1 a barrel on Friday as weak industrial production data in China reinforced concerns about the global economy as worries about the euro zone intensify due to the political turmoil in debt-laden Greece.

China's industrial production in April grew at its slowest pace in nearly three years, which along with poor trade numbers on Thursday, suggest the world's No. 2 economy continues to slow down after a weak first-quarter performance.

That made investors, who were already edgy with Greece struggling to form a coalition government that is crucial to a bailout-funded recovery, shun risky assets.

Sentiment is very weak because of the overall economic situation. There is uncertainty over Greece, uncertainty over France, said Ken Hasegawa, a commodity derivatives manager at Newedge Brokerage in Tokyo.

On the fundamental side, there is no supply shortage. In fact, there is oversupply at this point.

Brent crude for June fell $1.16 to $111.57 a barrel by 0757 GMT. The benchmark, which fell to a three-month low on Monday, is headed for its second week of losses.

U.S. June oil dropped $1.20 to $95.88 a barrel, resuming its downturn after ending a six-day slide on Thursday. U.S. crude is also on track for a second straight week of decline after touching its lowest level since mid-December on Wednesday.

Brent may slip to $110 later in the day or early next week and U.S. oil may touch $95, according to Hasegawa.

China's implied oil demand fell in April to its lowest in six months and showed the first year-on-year decline in at least three years, as refineries scaled back crude runs to undergo maintenance.

Implied oil demand fell 0.5 percent in April from a year earlier to 9.31 million barrels per day (bpd), the lowest since October 2011, Reuters calculations based on preliminary government data showed on Friday.


Investors shrugged off data earlier in the day that showed inflation in China, the world's second biggest oil consumer, continued to moderate in April and potentially gave Beijing more scope to loosen policy to support a slowing economy.

The decline in risk assets was broad-based, with Asian shares also slipping amid the deepening political upheaval in Greece and the weak Chinese industrial data.

An improved global supply scenario is also weighing on oil prices. Brent hit highs above $128 in March amid fears about supply disruptions from key producer Iran following Western sanctions.

We haven't been seeing an escalation with regards to tensions in Iran so the premium that was built into the price might just be starting to come off, said Ben Le Brun, market analyst at OptionsXpress in Sydney.

The Organization of the Petroleum Exporting Countries pumped 1.62 million barrels per day above its supply target in April, filling gaps caused by a large number of supply outages globally.

But analysts say OPEC could trim output in response to swelling stockpiles.

The unusually large global inventory builds in the first half of 2012 will lead to a prolonged slump in the need for OPEC oil, requiring substantial cuts in OPEC's output, Leo Drollas, chief economist for Centre for Global Energy Studies told an industry conference in Singapore.

These will come about, but not quickly enough to prevent the price of oil from sagging.

(Additional reporting by Randy Fabi and Manash Goswami; editing by Miral Fahmy)